	The Coast Guard Did Not Establish a Sound Business Case for the Polar Icebreaker Program

In September 2018, we found the Coast Guard did not have a sound  business case when it established the acquisition baselines for its polar  icebreaker program in March 2018 due to risks in four main areas— design, technology, cost, and schedule.. An unrealistic schedule puts the Coast Guard at risk of not delivering the  icebreakers when promised and the potential gap in icebreaking  capabilities could widen.. By not quantifying important risks, the Navy may have underestimated the  range of possible costs for about three-quarters of the entire program.. Coast Guard Intends to Use Proven Technologies for the Polar Icebreaker Program but Has Not Assessed Their Maturity

The Coast Guard intends to use what it refers to as “state-of-the-market”  or “proven” technologies for the polar icebreaker program, but it has not  yet conducted a technology readiness assessment to determine the  maturity of key technologies prior to setting program baselines.. DHS  concurred with this recommendation and stated that it planned to initiate a  study to assess how to better align its processes for technical reviews  and acquisition decisions.. DHS concurred with all of our recommendations and identified actions it  planned to take to address them.. Polar Icebreaker Program’s Cost Estimate Substantially Met Best Practices but Is Not Fully Reliable

We found that the Navy’s lifecycle cost estimate used to inform the polar  icebreaker program’s $9.827 billion cost baseline substantially adheres to  most of our cost estimating best practices; however, the estimate is not  fully reliable.. Polar Icebreaker Program’s Optimistic Schedule Is Driven by Capability Gap and Does Not Reflect Robust Analysis

The Coast Guard’s planned delivery dates of 2023, 2025, and 2026 for  the three ships were not informed by a realistic assessment of  shipbuilding activities, but rather were primarily driven by the potential  gap in icebreaking capabilities once the Polar Star reaches the end of its  service life (see figure 3).. Program baselines inform DHS’s and the Coast Guard’s decisions to  commit resources.. The Coast Guard Plans to Have a Stable Design before Starting Construction but Did Not Assess Design Maturity Prior to Setting Program Baselines

The Coast Guard expressed a commitment to having a stable design for  the polar icebreaker program prior to the start of lead ship construction,  but it set the program’s baselines before conducting a preliminary design  review—a systems engineering event that is intended to verify that the  contractor’s design meets the requirement of the ship specifications and  is producible.. The Coast Guard has yet to conduct a preliminary design review for the  program because DHS’s current acquisition policy does not require  programs to do so until after setting program baselines.. The cost estimate is not fully reliable because it only  partially met best practices for being credible.. To address the risks we identified and establish a sound business case,  we made a number of recommendations in our September 2018 report to  DHS, Coast Guard, and the Navy, including:
Conducting a technology readiness assessment in accordance with  best practices, identifying critical technologies, and developing a plan  to mature any technologies not designated to be mature before detail  design of the lead ship begins;
Updating the program’s cost estimate in accordance with best  practices before the contract option for construction of the lead ship is  awarded;
Developing a program schedule in accordance with best practices to  set realistic schedule goals for all three ships before the contract  option for construction of the lead ship is awarded; and
Updating the program’s acquisition program baselines prior to  authorizing lead ship construction, after completion of the preliminary  design review, and after it has gained the requisite knowledge on its  technologies, cost, and schedule.. Well-documented: substantially met.. Without a sound business case, acquisition programs are at risk of  breaching the cost, schedule, and performance baselines set when the  program was initiated—in other words, experiencing cost growth,  schedule delays, and reduced capabilities.
Why GAO Did This Study

To maintain heavy polar icebreaking capability, the Coast Guard, in collaboration with the Navy, plans to acquire up to three new heavy polar icebreakers. The Navy plans to award a contract in 2019 for the polar icebreaker program. GAO has found that before committing resources, successful acquisition programs begin with sound business cases, which include plans for a stable design, mature technologies, a reliable cost estimate, and a realistic schedule.
This statement addresses, among other things, the key acquisition risks facing the polar icebreaker program. This statement is primarily based on GAO's April 2018 and September 2018 reports examining the Coast Guard's polar icebreaker acquisition, and also draws from GAO's extensive body of published work examining the Coast Guard's and the Navy's shipbuilding efforts. In its prior work, GAO analyzed Coast Guard and Navy guidance, data, and documentation, and interviewed Coast Guard and Navy officials.

What GAO Found

The Coast Guard—a component of the Department of Homeland Security (DHS)—did not have a sound business case in March 2018, when it established the cost, schedule, and performance baselines for its heavy polar icebreaker acquisition program, because of risks in four key areas:
Design. The Coast Guard set program baselines before conducting a preliminary design review, which puts the program at risk of having an unstable design, thereby increasing the program's cost and schedule risks. While setting baselines without a preliminary design review is consistent with DHS's current acquisition policy, it is inconsistent with acquisition best practices. Based on a prior GAO recommendation, DHS is currently evaluating its policy to better align technical reviews and acquisition decisions.
Technology. The Coast Guard intends to use proven technologies for the program, but did not conduct a technology readiness assessment to determine the maturity of key technologies prior to setting baselines. Coast Guard officials indicated such an assessment was not necessary because the technologies the program plans to employ have been proven on other icebreaker ships. However, according to best practices, such technologies can still pose risks when applied to a different program or operational environment, as in this case. Without such an assessment, the program's technical risk is underrepresented.
Cost. The lifecycle cost estimate that informed the program's $9.8 billion cost baseline was not fully reliable because it only partially met GAO's best practices for being credible. It did not quantify the range of possible costs over the entire life of the program. As a result, the cost estimate may underestimate the total funding needed for the program. However, the estimate substantially met GAO's best practices for being comprehensive, well-documented, and accurate.
Schedule. The Coast Guard's planned delivery dates were not informed by a realistic assessment of shipbuilding activities, but rather driven by the potential gap in icebreaking capabilities once the Coast Guard's only operating heavy polar icebreaker—the Polar Star —reaches the end of its service life (see figure).
GAO's analysis of selected lead ships for other shipbuilding programs found the icebreaker program's estimated construction time of 3 years is optimistic. As a result, the Coast Guard is at risk of not delivering the icebreakers when promised and the potential gap in icebreaking capabilities could widen.

What GAO Recommends

In September 2018, GAO recommended, among other things, that the polar icebreaker program update program baselines following a preliminary design review, conduct a technology readiness assessment, re-evaluate its cost estimate, and develop a schedule according to best practices. DHS concurred with all of GAO's recommendations and identified actions it plans to take to address them.